[SCP-71] Proposal to Create the KeepKey Workstream

[pastaghost]

Summary

This proposal establishes and funds a new KeepKey workstream, and elects @pastaghost and @MattHighlander as workstream leaders. The workstream will utilize a hybrid funding strategy, with 50% of the funding being contributed by KeepKey, and 50% of the funding being contributed by the ShapeShift DAO. The primary efforts of the workstream will be directed toward building applications to support KeepKey users as well as the ongoing maintenance of the KeepKey integrations in existing ShapeShift products. Revenues from KeepKey device sales will be shared equally with the ShapeShift DAO for the period of this workstream.

Abstract

• As of Jan 1, 2022, KeepKey is now owned by @pastaghost and @MattHighlander. Despite KeepKey now being independently owned and operated, the overwhelming number of KeepKey users are also ShapeShift users, as ShapeShift is currently the only deFi platform providing first-class KeepKey support. The total amount of assets in orbit currently held on KeepKey devices is quite large (~$2.3B as of March 2021), and so it is in the mutual interest of both KeepKey and ShapeShift to work to migrate those users to the v2 web application and provide a high-quality UX that promotes customer retention and trading activity across the platform. This document proposes a workstream, led by @pastaghost and @MattHighlander, that will assemble and manage a joint engineering effort to build and maintain the KeepKey integration in the ShapeShift v2 platform and expand the product offerings in the KeepKey ecosystem. The ultimate goal of the workstream is to ensure that the ShapeShift platform is the number one place to use KeepKey devices and that KeepKey is the number one wallet to use on the ShapeShift platform.

  This proposal seeks to fund the proposed KeepKey workstream for a six-month term, after which the viability of the workstream will be reassessed and its funding recalculated based on feedback from the ShapeShift DAO. The workstream will utilize a hybrid funding strategy, with 50% of the funding being contributed by KeepKey, and 50% of the funding being contributed by the ShapeShift DAO. The workstream will be operated as a profit-generating enterprise, and sales revenues will be shared equally between KeepKey and the ShapeShift DAO treasury for the duration of the workstream. The portion of generated revenues allocated to the ShapeShift DAO treasury is only of supplementary benefit to the ShapeShift DAO; the primary financial benefits of this workstream to the ShapeShift DAO are the potential earnings generated by increased user traffic and increased valuation of the FOX token as a result of the efforts of the workstream. With estimates of assets held on KeepKey devices exceeding 2.3 billion dollars, there is a large potential for KeepKey to be the ShapeShift DAO’s largest revenue generator if users successfully migrate to the new platform.

  The KeepKey workstream shall be responsible for the following:

  Maintenance of KeepKey integration on legacy and v2 platforms

• Customer support for KeepKey issues raised through the ShapeShift support channels
• Development of KeepKey related features requested by the engineering workstream in v2 web application
• Technical support for the portions of future bounties accepted ShapeShift DAO involving KeepKey
• Technical support for partners of the ShapeShift DAO building with KeepKey
• Negotiate and organize opportunities with external partner organizations to the benefit of ShapeShift, KeepKey, or both. This includes, but is not limited to, adding native support for deFi platforms to KeepKey, adding support for new assets to KeepKey and its related products, or any other relevant bounties proposed by external partners.

Motivation

In order to maximize the success of the ShapeShift platform, users of the legacy ShapeShift web application need to be able to seamlessly migrate to the v2 application. Since the overwhelming majority of legacy ShapeShift’s assets in orbit were held on KeepKey devices, it follows that maximizing user migration to the v2 app requires that first-class support for KeepKey be provided by the new application. With KeepKey, we are able to tailor the hardware wallet UX to the needs of the ShapeShift user base in order to provide existing users of both ShapeShift and KeepKey with the best hardware wallet experience available online. Doing so is of mutual benefit to both KeepKey, by providing users with quality services that promote customer retention, and ShapeShift, by promoting KeepKey user activity on the platform and driving revenue to the ShapeShift DAO through the existing affiliate revenue programs.

Specification

Funding

150,000 USDC contributed by KeepKey

150,000 USDC contributed by ShapeShift DAO

Funds are to be transferred to a treasury service controlled by the workstream leaders.

Budget

Position | Monthly Expense | 6-Month Total Expense |

Leadership | $4,638.33 | $27,830.00 |

| $4,638.33 | $27,830.00 |

Sr. Firmware Engineer | $16,666.67 | $100,000.00 |

Sr. Software Engineer | $13,333.33 | $80,000.00 |

Jr. Software Engineer | $3,200.00 | $19,200.00 |

Discretionary Engineering Funds | | $5,000.00 |

Product/Marketing Manager | $2,500.00 | $15,000.00 |

Discretionary Marketing Funds | | $13,140.00 |

Support Agent | $2,000.00 | $12,000.00 |

| | |

| | |

Total | $50,000.00 | $300,000.00 |

Notes:

• Any unused funds remaining at the end of the workstream period will be divided evenly and returned to the KeepKey/ShapeShift DAO treasuries.

• Funds allocated for the above-listed engineering positions may be used to hire short-term contractors anytime during the duration of the workstream that those positions are vacant.

Leadership Compensation

Leadership may not take any income directly from this workstream that exceeds minimum wage, with minimum wage being defined as $55,660 annually or $27,830 total over the duration of this proposal.

Benefits

The ShapeShift DAO treasury will receive direct monthly payments from KeepKey in the amount of 50% of the total KeepKey sales revenue. An itemized sales report will be made publicly available to all members of the ShapeShift DAO.

Drawbacks

It cannot be guaranteed that this Workstream proposal will be profitable for either KeepKey or the ShapeShift DAO. The profitability of the workstream depends directly on KeepKey sales revenue.

Vote:

[jonisjon]

Hey and - this proposal has been in ideation for over 2 weeks now. Is there a plan to move this forward with or without any additional amendments?

[pastaghost]

Hey , the proposal has moved forward and is now live on Snapshot.

The only modifications made were the additions of two sections outlining the stated goals of the workstream and the success metrics by which the effectiveness of the workstream may be evaluated.

[0xean]

Would have been nice to see some of the other suggestions or modifications addressed in this revision, I also think it would have been much better to have goals for the KPIs instead of just the metrics that are being measured without any specific target.

Ultimately, I still don’t think this proposal makes sense for the DAO in its current form and have voted against it.

[Josh_shapeshiftdemo]

I have voted “no” on this proposal in snapshot. I would like to see more collaboration between KeepKey and the DAO, and I can see that it could include the DAO contributing funding to the joint operation. But I do not like it as stated in this proposal. In addition, the process of this proposal making it to the voting stage did not engender confidence that the proposed workstream leaders, and are ready for the responsibility to effectively lead this newly formed workstream.

I thought the proposal going into the discussion phase and the thorough AMA they conducted in the beginning was a great start. I was not aware of any further collaboration after that. At the AMA I stated a strong objection to the fact that there were no success criteria in the proposal, and that I would be happy to review any that would be considered.

I did not hear about that again until 2 weeks later, when the proposal was put up for official vote on SnapShot. And the success criteria listed are not acceptable for me.

I am also concerned about the allocation of the budget, which I stated in the governance call on April 14. I currently do think it’s a good idea for people who are already holding full-time roles with the DAO to also have part-time roles in other workstreams.

If this proposal does not pass, I hope that Highlander and PastaGhost will work more with the community and create a second proposal that is built with more collaboration and with better success criteria, and perhaps a better allocation of funds. I would very seriously consider voting “yes” if that were the case.

[0xean]

I just want to reiterate that I am personally in support of finding a relationship between the DAO and KK that is mutually beneficial for both parties.

Some specific criteria that would change my vote if this current one does not pass and a new proposal is brought forward.

Finding a way to align incentives between the partners. This has been discussed in the previous threads and the AMA, but I still think there is many ways to better structure this arrangement so each partner benefits in a multitude of possible outcomes.

Currently it sounds like we have 2 full time engineering workstream members both working part time in the KK workstream. As Josh stated, I am not in favor of this. Wouldn’t it be much cleaner and more productive to have only 1 of these people move to KK full time and the other stay in the Engineering workstream full time?

KPIs without targets are just numbers, would really love a way for us to declare at the end of each cycle that this workstream was successful or not and if not what would need to change for it to be successful in the next cycle.

Better community engagement from the workstream leaders. While the discussions have been great, from an external perspective there has not been much collaboration or feedback taken into account in the formation of this proposal

[willy]

Really appreciate and ’s comments as to why they are voting no on this proposal even though they would be in favor of a modified version.

While I am strongly in favor of passing a proposal that better aligns interests of KeepKey and ShapeShift DAO, it’s clear that there is some strong, justified feedback from the community about the current proposal. I hear this feedback and appreciate how clear and constructive it is. I think this proposal would have benefitted from more discussion in the ideation stage before advancing to the proposal stage, and want to recommend that and take their proposal down, return to the ideation stage, and address and/or incorporate the feedback from the community before re-proposing.

I think this will result in a better final proposal, more alignment and support from the community and workstreams, and ultimately a longer and more fruitful relationship.

[pastaghost]

To the ShapeShift DAO Community:

As of the writing of this post, SCP-71 is on track to pass governance by a margin of 700k FOX. While the proposal does currently have sufficient voter participation to pass quorum, we do not feel that this represents sufficient support from the community. Given the contention surrounding this proposal, we have decided to pull the proposal from Snapshot and return to the ideation stage for continued discussion on how we might best come to an agreement that garners broader support from the ShapeShift DAO.

It has come to our attention that several community members are left with as-of-yet unaddressed concerns, so we would like to allow more time for those concerns to be voiced and discussed. We intend to leave the proposal in ideation for the remainder of the week and will repost it to Snapshot and Boardroom on Saturday, April 23, hopefully in a form that better satisfies the interests of all parties involved.

To ensure that time is not lost in launching the KeepKey engineering efforts, we will continue recruiting efforts from outside the current workstreams and will continue development at KeepKey’s expense.

We thank the community for those who supported us through this governance cycle. Our intent in returning the proposal to ideation is to make a gesture of good faith to the community. It is our hope that together we can strengthen our proposal and find ways for KeepKey to work closely with the ShapeShift DAO.

– Pastaghost & Highlander

[Giantkin]

Just pointing out one aspect. 2 eng full time, plus doing outside on their own time, seems totally ok. As that was discussed, and encouraged that some could/would contribute to more than one workstream without any problems. Why not outside of the DAO?

As long as the work is being done, as …agreed upon, it shouldnt be of concern.

[pastaghost]

Apologies for the delay - it took quite a bit longer than expected for us to draft a set of modifications that we felt might best satisfy the strongest objections to the original proposal. Please see the updated proposal below. We will postpone advancing the proposal to Snapshot until discussions have concluded here.

Summary

This proposal establishes and funds a new KeepKey workstream, and elects @Pasta Ghost and @Matt Highlander as workstream leaders. The workstream will utilize a hybrid funding strategy, with 50% of the funding being contributed by KeepKey, and 50% of the funding being contributed by the ShapeShift DAO. The primary efforts of the workstream will be directed toward building applications to support KeepKey users as well as the ongoing maintenance of the KeepKey integrations in existing ShapeShift products. Revenues from KeepKey device sales will be shared equally with the ShapeShift DAO for the period of this workstream.

Links to the original and incubation and ideation posts can be found here:

incubation | ideation

Abstract

• As of Jan 1, 2022, KeepKey is now owned by @Pasta Ghost and @Matt Highlander. Despite KeepKey now being independently owned and operated, the overwhelming number of KeepKey users are also ShapeShift users, as ShapeShift is currently the only deFi platform providing first-class KeepKey support. The total amount of assets in orbit currently held on KeepKey devices is quite large (~$2.3B as of March 2021), and so it is in the mutual interest of both KeepKey and ShapeShift to work to migrate those users to the v2 web application and provide a high-quality UX that promotes customer retention and trading activity across the platform. This document proposes a workstream, led by @Pasta Ghost and @Matt Highlander, that will assemble and manage a joint engineering effort to build and maintain the KeepKey integration in the ShapeShift v2 platform and expand the product offerings in the KeepKey ecosystem. The ultimate goal of the workstream is to ensure that the ShapeShift platform is the number one place to use KeepKey devices and that KeepKey is the number one wallet to use on the ShapeShift platform.

  This proposal seeks to fund the proposed KeepKey workstream for a six-month term, after which the viability of the workstream will be reassessed and its funding recalculated based on feedback from the ShapeShift DAO. The workstream will utilize a hybrid funding strategy, with 50% of the funding being contributed by KeepKey, and 50% of the funding being contributed by the ShapeShift DAO. The workstream will be operated as a profit-generating enterprise, and sales revenues will be shared equally between KeepKey and the ShapeShift DAO treasury for the duration of the workstream. The portion of generated revenues allocated to the ShapeShift DAO treasury is only of supplementary benefit to the ShapeShift DAO; the primary financial benefits of this workstream to the ShapeShift DAO are the potential earnings generated by increased user traffic and increased valuation of the FOX token as a result of the efforts of the workstream. With estimates of assets held on KeepKey devices exceeding 2.3 billion dollars, there is a large potential for KeepKey to be the ShapeShift DAO’s largest revenue generator if users successfully migrate to the new platform.

  The KeepKey workstream shall be responsible for the following:

  Maintenance of KeepKey integration on legacy and v2 platforms

• Customer support for KeepKey issues raised through the ShapeShift support channels
• Development of KeepKey related features requested by the engineering workstream in v2 web application
• Technical support for the portions of future bounties accepted ShapeShift DAO involving KeepKey
• Technical support for partners of the ShapeShift DAO building with KeepKey
• Negotiate and organize opportunities with external partner organizations to the benefit of ShapeShift, KeepKey, or both. This includes, but is not limited to, adding native support for deFi platforms to KeepKey, adding support for new assets to KeepKey and its related products, or any other relevant bounties proposed by external partners.

Motivation

In order to maximize the success of the ShapeShift platform, users of the legacy ShapeShift web application need to be able to seamlessly migrate to the v2 application. Since the overwhelming majority of legacy ShapeShift’s assets in orbit were held on KeepKey devices, it follows that maximizing user migration to the v2 app requires that first-class support for KeepKey be provided by the new application. With KeepKey, we are able to tailor the hardware wallet UX to the needs of the ShapeShift user base in order to provide existing users of both ShapeShift and KeepKey with the best hardware wallet experience available online. Doing so is of mutual benefit to both KeepKey, by providing users with quality services that promote customer retention, and ShapeShift, by promoting KeepKey user activity on the platform and driving revenue to the ShapeShift DAO through the existing affiliate revenue programs.

Specification

Goals

• Retain existing KeepKey users
• Drive new and existing KeepKey users to the ShapeShift v2 platform
• Drive KeepKey user activity on the ShapeShift v2 platform

Success Metrics

• Measured KPIs:

  Targeted 8% month-over-month increase in device sales

• Targeted 8% month-over-month increase in new device setups
• Targeted 8% month-over-month increase in daily active users
• All success metrics to be measured using Pendo on Alpha platform

Funding

150,000 USDC contributed by KeepKey

150,000 USDC contributed by ShapeShift DAO

Funds are to be transferred to a treasury service controlled by the workstream leaders.

Budget

Position | Monthly Expense | 6-Month Total Expense |

Leadership | $4,638.33 | $27,830.00 |

| $4,638.33 | $27,830.00 |

Sr. Firmware Engineer | $16,666.67 | $100,000.00 |

Engineering Bounty Allocation | $15,000.00 | $90,000.00 |

Discretionary Engineering Funds | | $3,000.00 |

Product/Marketing Manager | $2,500.00 | $15,000.00 |

Discretionary Marketing Funds | | $24,340.00 |

Support Agent / Fulfillment | $2,000.00 | $12,000.00 |

Total | $50,000.00 | $300,000.00

• |

  *Notes:

  Any unused funds remaining at the end of the workstream period will be divided evenly and returned to the KeepKey/ShapeShift DAO treasuries.

• Funds allocated for the above-listed engineering positions may be used to hire short-term contractors anytime during the duration of the workstream that those positions are vacant.

Leadership Compensation

Leadership may not take any income directly from this workstream that exceeds minimum wage, with minimum wage being defined as $55,660 annually or $27,830 total over the duration of this proposal.

Benefits

• 10% of KeepKey sales revenue will be used to purchase FOX, which will then be sent to the FOXy contract to increase rebasing rewards for all FOXy holders. This will continue in perpetuity, so long as KeepKey and the ShapeShiftDAO maintain a productive working relationship.
• For the period of this proposal, the ShapeShift DAO treasury will receive direct monthly payments from KeepKey in the amount of 50% of the remaining KeepKey sales revenue. An itemized sales report will be made publicly available to all members of the ShapeShift DAO.

Drawbacks

It cannot be guaranteed that this Workstream proposal will be profitable for either KeepKey or the ShapeShift DAO. The profitability of the workstream depends directly on KeepKey sales revenue.

Vote:

[0xean]

@Pasta and @Matt -

I want to thank you both for the productive conversations and revisions to this proposal! I am personally in support of this moving forward with the modifications.

By partnering with a centralized, brick and mortar entity, the Shapeshift DAO is doing things that no other DAO has done to date (at least to my knowledge). This type of innovation is incredibly cool and if we are all successful should prove to be an amazing benefit to all FOX holders.

[jonisjon]

Super excited and supportive of this revised version.

Changes I am most excited about which make this proposal significantly better for the DAO community than the first version:

(1) there are now goals/kpis that are falsifiable and measurable, this will make it much easier to track our progress of how things go and let us re-align more efficiently on goals at the end of the 6 months whether we hit them or not.

(2) I like the realignment of the budget to use bounties from interested engineers rather than trying to put that position into one salary for a part time role. I think the workstream will be able to make much more efficient use of its resources that way and is less likely to pull resources/cause tension from other workstreams if any current engineering workstream members do decide to pickup any of this work.

(3) I am most excited about the long term alignment via keepkey helping power additional FOXy rewards! This is really amazing and shows the world an example of how any group or entity wanting to align incentives with the DAO can reward the entire community by simply buying back fox with a % of revenues and rewarding that to FOXy holders via the FOXy contract to further amplify the rebases. The way the contract was built, anyone can do this, if we champion this method more after this example it will further increase the value of FOXy and FOX for the whole community, really cool way to align incentives long term!

• thanks so much for the revisions and time on this, this has my full support moving back to snapshot. One thing, since this is technically back in ideation, can you re-add a new poll at the bottom of this thread (or the above post you just made) so we can indicate our support for moving it forward back to snapshot?

[Josh_shapeshiftdemo]

Thank you both for pulling the previous proposal and making modifications so you could get a proposal passed with greater support. I would vote for this proposal as is, with one exception.

The one metric that I believe we already have is monthly KeepKey sales. You say that “all success metrics to be measured using Pendo”. Pendo won’t be able to measure device sales, will it?

You have that data already, correct? If so, can you report what that has been over the past few months? That would be our starting point for the 8% month-over-month growth.

Thanks

[Highlander]

Yes shopify has good numbers on this will post shortly

[Highlander]

month | orders | gross_sales | discounts | returns | net_sales | shipping | duties | additional_fees | taxes | total_sales |

2022-01 | 157 | 9595.000 | -525.500 | -419.570 | 8649.930 | 2030.850 | 0.000 | 0.000 | 36.430 | 10717.210 |

2022-02 | 175 | 10535.000 | -99.000 | -2450.000 | 7986.000 | 1725.580 | 0.000 | 0.000 | 76.510 | 9788.090 |

2022-03 | 145 | 7791.000 | -820.000 | -686.000 | 6285.000 | 1882.630 | 0.000 | 0.000 | 39.440 | 8207.070 |

[Josh_shapeshiftdemo]

Thanks - when you post this officially, please make sure you don’t state that device sales will be measured through Pendo.

[CFOScott]

and @pastaghost can you confirm the definition of “Leadership” in your proposal?

[CFOScott]

I have conflicting views on this proposal and would like to share. I have been following this proposal since inception and have watched an impressive governance process unfold within the DAO. It’s great to see this “Socratic” approach so effective.

In my role at ShapeShift (SS), I’ve had the benefit of seeing and understanding the historical costs, complexities, and financial performance of KeepKey (KK) as a product (under the SS umbrella). With that in mind, here are my thoughts:

Background/Understanding: KK is a separate entity and product from the DAO that is independently owned by and . It was purchased from SS in December of 2021.

KK is seeking $150k in funding from the DAO to keep its software/hardware current.

In return KK will pay the DAO 10% of sales revenue in perpetuity assuming the parties “maintain a productive working relationship.” (for FOX purchases sent to FOXy contract).

For the duration of the proposal, KK pays the DAO 50% of “remaining” KK sales revenue.

Proposal budget includes a line for “Leadership”

50% of KK gross sales for 6mo = ~$27,000 or $4,500/mo; KK net sales: $22,500 or $3,750/mo.

Clarifying questions:

• Are sales defined as Gross or Net?

• You mention “50% of the remaining KK sales revenue.” What does “remaining” mean in this context?

Who is Leadership? and

• , I’m assuming you are asking to be paid here.
• In the event the DAO decides to eliminate or change FOXy, can the DAO re-direct the 10% payment? I would think the DAO would want this flexibility?
• Is the 10% and 50% calculated off the same base revenue number?
• Who determines what a “productive relationship” is?
• Why are the KPI’s in the proposal and what happens if they are/are not met?

What happens to KK (the product/company

• ) if this proposal fails?

How reliant is KK on the DAO for future iterations of its product? (is this the first of many requests for funding?

• )

Final thoughts:

I’d love to understand the answers to my questions above. I see this request by KK as a loan or grant by the DAO to KK and should be structured as such. I think the proposal, as it stands, addresses some of this. The DAO must see benefits that reasonably exceed its capital allocation. This should come in both tangible and intangible forms; with the latter not easily quantifiable. I do support the success of KK and believe its success is a benefit for the DAO. I am conditionally supportive of seeing this proposal through with clarification of the above questions; however, I’m concerned with KK’s long-term reliance on the DAO for funding and what it would mean for KK if this proposal failed (or future funding requests fail). At the highest level, I worry about the precedent this may set (e.g., does this create a reliance on the DAO? Or, would this compel other companies to request “pay-to-play” compensation for compatibility with the SS platform?).

[0xean]

maintain a productive working relationship.

Some great questions above from Scott and do agree that it may make sense to firm up the language around this a bit more so both parties know what this means.

[pastaghost]

The leadership roles outlined in the proposal are related to administrative and day-to-day managerial operations. @pastaghost’s responsibilities will be primarily concerned with engineering team management, and ’s efforts will be primarily focused on business development/strategy and product direction.